Lessons Learned for Business Owners and Managers

Employee Benefits

Lessons Learned for Business Owners and Managers

Short-term fixes can prove to be long-term solutions.

We queried Kiplinger Letter readers on what lessons they’ve learned in this recession — quick fixes and permanent changes alike. Here are excerpts from what they sent us. Please share yours with our comments feature below.


"Our organization has learned the critical importance of maintaining a low-cost operating position regardless of market conditions. The choices we’ve made in the past year and a half could and should have been made earlier. Also, as we entered the deep recession in Q4 2008, we should have taken action to cut infrastructure and staff cost more quickly. We let it drag on too long, which created a hole early in 2009 that we spent the rest of the year working hard to overcome."

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—  M.A., Manufacturing

"…We learned in the recessions in the 1980's that you cannot 'save' your way to profitability -- saving on expenses helps you survive, but only sales, sales and more sales will get you out of the hole.... We have hired two more sales people during the recession—one part time and one commission only."


— J.A.P, Manufacturing

"…We failed to recognize and adapt to change. Most of the models used to run businesses were old. Many focused on only U.S. data in the new global world. And many used industrial-age models in the new information age we are in. Many made infinite assumptions in a finite world. Worst of all, we put too much faith in them to explain away risk and ignored plain common sense.

—J.V.S., Banking

"Do not put all your eggs in one basket especially when dealing with larger banks….When this banking problem raised its head, all personal relationships and the good ol’ days went out the window. While we have struggled to maintain any kind of profit, they have helped by eliminating 60% of our inventory and 40% of our accounts receivable (we will charge off less than half in 08-09), thus putting us in default of our loan agreement — so they could raise our rates by 2 1/4%. This is a bank that took TARP, gave it back, and just reported record earnings for this last quarter. Our needs are too large to deal with smaller community banks and all of the larger banks are pulling the same tricks.


Do not wait, out of sympathy, to reduce staff. This only penalizes those employees that you will keep."

—C.M., Manufacturing

"One change we implemented was to move from a company-provided credit card (frankly we feared changes because this company changed to a bank holding company to accept several billion dollars from the Fed) to personal credit cards. Ninety-five percent of our frequent travelers were able to do so. The other 5% we continued providing the card with a plan to limit its use or work towards the employees’ own card. A somewhat unexpected side benefit is that expenses have come down 10 to 15%. We will continue with this practice."

—P.D.H., Management outsourcing

"We have become very efficient through this downturn. We never got overleveraged. We watch our costs closely and have very good accounting systems in place. When the market slowed down we were quick to lay off employees and slow down the number of speculative homes we build. We stopped any expansion plans and lowered our break-even point – battening down the hatches so to speak.


We moved to a smaller office, saving 60% on rent. We paid off construction loans as fast as possible and kept our debt to equity ratio low. We communicated closely with our banks. We established a new banking relationship early last year that helped us get through losing our three main construction lenders this year. We just got a new line with another bank. Sales seem to be a little better and we have returned to profitability."

T.W., Homebuilding

"Certainly as a small business we have learned again the hard lessons of self reliance and that the government isn't here to help us. We have learned that good credit with our vendors yields more understanding in hard times when payments are slowed down. The one thing we can't control is our loan to value ratio with our bank and like other companies based on commercial real estate we are hard pressed on this issue, but maintain that banks should be patient as values will rise with revenues over time."

— K.M.W., Resort management


"Slowdowns in the business climate offers management the opportunity to look at cost-saving measures that can be implemented and remain even when business picks up. When business is blowing and going, these simple expense reductions get masked in the madness."

— T.C., Building supplies

"Until last year it was very difficult to find good personnel in the accounting profession, especially for CPA firms. That has reversed. We are interviewing very qualified candidates, mostly college grads, and are excited about the future."

— J.P., Accounting

Our employees will participate in cost cutting if we lead by example. Reduce owner wages & benefits proportionally at a minimum. Share the information openly and often …. Don't accept marginal performance. We owe it to our co-workers to maximize performance and eliminate people who are a negative influence on the company. The job survival of everyone depends on this."

— R.B., Construction & remodeling

"We fired our outside cleaning company saving $1700 per month and divided up the responsibilities among the employees. Not only did they do a better job but they all took more pride in how the office and their space looked. It was a win-win."

— J.W.B., Industrial supplies

"Our company is moving some of our managers from a monthly or annual salary to a day wage. Since management expense can be a very significant production expense, we are paying some middle managers for each day they work. Although we could reduce our hourly and piece work employees without problem this would only affect about 2/3 of our total labor force. Our middle management expense still consumed 1/3 of our payroll. Rather than lay off these individuals and lose the talent, they are being converted to a day wage. The effect is positive since we retain most of our middle management talent and reduce payroll further."

—J.W., Farming

After 47 years in business, I’ve seen my share of recessions. This one arrived immediately after the greatest period of time my industry has ever seen. My employees worked so hard to stay caught up in boom, I really didn’t want to lose any of them when our markets died and we slowed down. Most of my competition laid off a substantial portion of their employees while I retained all of mine. A couple of fairly large contracts materialized and I was one of only a few in my industry (locally) who had a full, well trained staff and was awarded the contracts. After a very slow start, we are now having a decent year. I will not lay off well trained employees in the future until I absolutely have to do so."

— C.C., Metalworking